1. Introduction

The City and County of San Francisco’s Office of the Assessor-Recorder retained Aequitas Compliance Solutions, Inc. to review 382 residential mortgage loan transactions (the “subject loans”) that resulted in foreclosure sales that occurred from January 2009 through October 2011.1 Over this period, there were 2,405 foreclosure sales. The subject loans thus represent approximately 16% of the total. (See Appendix B – Methodology.)

We analyzed the subject loans to determine the mortgage industry’s compliance with applicable laws. Specifically, we focused our analysis on important topics relating to six Subject Areas:

• Assignments
• Notice of Default
• Substitution of Trustee
• Notice of Trustee Sale
• Suspicious Activities Indicative of
Potential Fraud
• Conflicts Relating to MERS

Scribd

“Almost all involved either legal violations or suspicious documentation”

Gretchen Morgenson-

An audit by San Francisco county officials of about 400 recent foreclosures there determined that almost all involved either legal violations or suspicious documentation, according to a report released Wednesday.

Commissioned by Phil Ting, the San Francisco assessor-recorder, the report examined files of properties subject to foreclosure sales in the county from January 2009 to November 2011. About 84 percent of the files contained what appear to be clear violations of law, it said, and fully two-thirds had at least four violations or irregularities.

The report comes just days after the $26 billion settlement over foreclosure improprieties between five major banks and 49 state attorneys general, including California’s. Among other things, that settlement requires participating banks to reduce mortgage amounts outstanding on a wide array of loans and provide $1.5 billion in reparations for borrowers who were improperly removed from their homes.

[NEW YORK TIMES]

GOOD FOR YOU!

Now if only if others can follow instead of bending the rules for some in Florida this would be wonderful!

THE COLUMBIAN-

Republican gubernatorial candidate and state Attorney General Rob McKenna has returned nearly $14,000 in donations from people tied to a firm that helps mediate foreclosures.

McKenna’s office had put the company, Northwest Trustee Services, Inc., on notice in 2010 that they could face investigation, but his campaign accepted donations from the attorneys tied to the firm on Sept. 30.

[THE COLUMBIAN]

Alison Frankel-

U.S. District Judge Frederic Block of Brooklyn federal court will probably, in the end, approve a $1 million settlement between the Securities and Exchange Commission and former Bear Stearns fund managers Ralph Cioffi and Matthew Tannin. He said as much in open court Monday, presiding over a settlement hearing rather than the civil trial scheduled to begin that day. But for everyone except Cioffi, Tannin, and their lawyers, the real story at Monday’s hearing was Block’s stream-of-consciousness musings on the appropriate role of a judge overseeing an SEC case. If there was any doubt that U.S. Senior District Judge Jed Rakoff has inspired soul-searching in the nation’s federal judiciary, the utterly compelling transcript of the hearing before Block should put it to rest. (My Reuters colleague Jessica Dye attended the hearing and sent me the transcript.)

[REUTERS LEGAL]

Scribd

HSH-

Readers of Victorian novels know what debtor’s prison is–a scabrous place where distressed maidens, handsome heroes and pitiable children who owe as little as 60 cents are locked up until their debts are paid. The U.S. abolished federal imprisonment for unpaid debts in 1833, and today, most of us are pretty sure that we can’t be sent to the pokey for blowing off a creditor.

We’d be wrong.

Creditors work the system to jail debtors

While we can’t be sent to a federal prison for ignoring bills, many states allow citizens to be popped into state or local lockups for unpaid debt. Savvy collection agencies use this process to do an end run around the Fair Debt Collection Practices Act. Here’s how it works:

• The collection agency sues the debtor, often in small claims court, with perhaps only a mailed summons (legal in some states, Illinois for example) or, worse, an imaginary notice referred to as “sewer service”
• The debtor tosses the paper threat unread or misunderstands its implications. The debtor automatically loses the case because he doesn’t show up in court. He’s ordered to pay the collection agency, and the judge issues a arrest warrant for failing to appear and/or make the court-ordered payments
• Mr. Debtor is dragged out of a PTA meeting on the outstanding warrant and goes to jail
• He makes bail, which is (amazingly!) set at the exact amount owed
• The bail is turned over to the creditor. Taxpayers foot the bill for arresting and jailing the “evildoer”
• If unable to come up with the money owed, Mr. Debtor rots in jail. According to a Minnesota Star Tribune article, an Illinois man was sentenced “to indefinite incarceration” until he paid his $300 lumber yard debt

What about mortgage lenders?

[...]

[HSH FINANCIAL NEWS BLOG]

WASHINGTON–People seeking a review of their mortgage foreclosures under the Federal banking agencies’ Independent Foreclosure Review now have until July 31, 2012, to submit their requests.

The Office of the Comptroller of the Currency (OCC) and the Board of Governors of the Federal Reserve System (Federal Reserve) today announced that the deadline for submitting requests for review under the Independent Foreclosure Review has been extended. The new deadline, July 31, 2012, provides an additional three months for borrowers to request a review if they believe they suffered financial injury as a result of errors in foreclosure actions on their homes in 2009 or 2010 by one of the servicers covered by enforcement actions issued in April 2011.

The deadline extension provides more time to increase awareness of how eligible people may request a review through the Independent Foreclosure Review process and to encourage the broadest participation possible.

As part of enforcement actions issued in April 2011, the OCC, Federal Reserve, and the Office of Thrift Supervision required 14 large mortgage servicers to retain independent consultants to conduct a comprehensive review of foreclosure activity in 2009 and 2010 to identify borrowers who may have been financially injured due to errors, misrepresentations, or other deficiencies in the foreclosure process. If the review finds that financial injury occurred, the borrower may receive compensation or other remedy.

Borrowers are eligible for an Independent Foreclosure Review if they meet the following basic criteria:

• The mortgage loan was serviced by one of the participating mortgage servicers.
• The mortgage loan was active in the foreclosure process between January 1, 2009 and December 31, 2010.
• The property securing the mortgage loan was the borrower’s primary residence.

Participating mortgage servicers include: America’s Servicing Company, Aurora Loan Services, BAC Home Loans Servicing, Bank of America, Beneficial, Chase, Citibank, CitiFinancial, CitiMortgage, Countrywide, EMC, Everbank/Everhome Mortgage Company, Financial Freedom, GMAC Mortgage, HFC, HSBC, IndyMac Mortgage Services, MetLife Bank, National City Mortgage, PNC Mortgage, Sovereign Bank, U.S. Bank, Wachovia Mortgage; Washington Mutual, Wells Fargo; and Wilshire Credit Corporation.

There are no costs associated with being included in the review. For more information, borrowers can call 888-952-9105, Monday through Friday, 8 a.m.-10 p.m. ET or Saturday, 8 a.m.-5 p.m. ET or visit www.federalreserve.gov/consumerinfo/independent-foreclosure-review.htm or www.occ.gov/independentforeclosurereview.